Tax amnesty helps Belgium balance budget

7 January 2005

BRUSSELS – Belgium has balanced its federal budget for the fifth straight year, thanks in part to the so-called foreign tax-dodge law.

“That makes Belgium an exception in the euro zone,” said the country’s budget minister, Johan Vande Lanotte.

Only Finland did better in 2004 while eight other countries failed to meet their targets.

France and Germany were among the countries that breached the EU’s 3 percent budget deficit limit.

Commentators said Belgium was helped by its tax amnesty, designed to repatriate money held by Belgian residents in foreign accounts. The ‘foreign tax-dodge law’, as it was dubbed, has
generated EUR 200 million for the Belgian economy.

Without those extra millions, Belgium would have recorded a 0.1 percent structural deficit.

Belgium is still behind its EU peers, however, when it comes to its public debt. At the
end of 2004, it had debts of 95.9 percent of its gross domestic product and it must cut
them to 60 percent of GDP if it is to meet EU rules.

Finance Minister Didier Reynders, however, stressed that Belgium has significantly cut debt
in the last decade.

“In 1993, the difference between the public debt in Belgium (136.7 percent of GDP) and the average public debt of the other countries was 69 percent,” he said.

The Belgian government expects the debt to continue to fall, although it warns the rate
at which it will fall will slow down when the state takes on the debt of the struggling
national rail company SNCB. The train operator’s debt is thought to account for about 2.6 percent of GDP.

Subject: Belgian news